POLL: Jamberoo farmer slams supermarket milk war

Australia Day 2011 will be remembered as a dark day for dairy farmers.

It was the day Coles supermarkets started selling its home brand milk for $1 a litre, a move that was immediately matched by rival Woolworths.

Two years on, Jamberoo dairy farmer and Kiama councillor Mark Honey said farmers continued to feel the impact of the cost of the milk-price war.

Cr Honey said his farm’s income would be down more than $100,000 over the two-year period and he believed that would be a common position across the industry.

The two-year period also accounts for a good season in 2012 when high cattle prices meant the Honeys had been able to compensate by selling livestock.

Coles and Woolworths admit they sell their private label milk at a loss to bring customers into their stores for other purchases and say they absorb the losses on milk themselves, but Mr Honey said the supermarkets were not doing farmers any favours.

‘‘Because Coles and Woolworths have reduced the price of milk there is a consumer expectation that [$1 a litre] is the price of milk, so that is what consumers are expecting to pay,’’ Mr Honey said.

‘‘My message is that despite what Coles and Woolworths are saying they are not helping the farmer stay in business.’’

Kiama council is considering developing an education awareness campaign in support of the dairy farming community of Kiama.

Initially Kiama councillor Dennis Seage wanted to see Kiama’s Daisy the Cow used to promote Dairy Farmers branded milk, which most Jamberoo farmers supply, however the matter was complicated by the fact Bega Cheese and Parmalat also receive milk from the Kiama municipality – and the fact Daisy was not allowed to be used for political purposes.

Cr Seage’s motion was a reaction to the Kiama Woolworths not stocking Dairy Farmers two-litre full cream milk, which is Dairy Farmers’ main product line.

Woolworths says it supports local farmers by stocking the Berry-based South Coast Milk instead.

While Mr Honey appreciated what his fellow councillors were trying to achieve, he said telling the two major supermarkets what they should stock would have little impact.

‘‘When people start telling Coles and Woolworths what they think they should be supplying, it has no credence,’’ he said.

‘‘Coles and Woolworths are purely companies looking after their shareholders with no regard to the viability of farms that are supplying them.

‘‘The basic premise is, to help farmers we have to be paid more for our milk by our processors and that at the end of the day would come back to the consumer ... but it is the processors and the supermarkets we have the fight against.’’

Independent Grocers of Australia (IGA) has called on the federal and state governments, as well as the ACCC, ‘‘to ensure fair competition on a level playing field’’ after Coles began offering the discounted milk through its 600 Coles Express convenience outlets.

Chairman of the NSW State IGA Board Ian Ashcroft said people didn’t understand the continued effect of supermarket discounting.

“Small businesses do not have the luxury of being able to cross subsidise their discounting with poker machine revenues as the two mega chains do, nor are they designed to work across multiple industries,’’ Mr Ashcroft said.

“It is time for the large national grocery chains to start playing fair with the Australian people and give everyone a go – they can have their marketing war over products that won’t see the farmers, manufacturers and suppliers go broke.’’